The Long View on IFRS: Gerhard Mueller

Gerhard
G. Mueller helped popularize the field of international accounting
among academics and their students. His contributions have spanned
many areas of accountancy, including teaching, research and
professional service. Mueller, who is retired, has been a professor
at the University of Washington, served as a FASB board member from
1996 to 2001, and is a past president of the American Accounting
Association (AAA). He was an international accounting research
fellow in the New York office of Price Waterhouse and has lectured
in dozens of countries.

Mueller’s
first major journal article, prompted by the approach of the 1962
International Congress of Accountants and published in the October
1961 issue of The Accounting Review, emphasized the
international responsibilities accountants collectively needed to
address. He felt it was unworkable for foreign companies whose
securities were traded in the United States to have to produce two
sets of financial statements. He proposed the creation of a
permanent international authoritative body that would provide a
structure of permanence to the international congresses, lead to
international exchange of accounting information, support the
advancement of accounting thought, and ultimately collaborate on
international accounting and reporting practices.

Mueller
was asked about the SEC’s proposed road map for the adoption of IFRS
for U.S. public companies and the proposal’s implications for the
profession. The following are excerpts from that interview:

Flesher:
Can you outline your thoughts on IFRS and the recent push for
acceptance of IFRS in the U.S.?

Mueller: Over
the next five to 10 years, IFRS and U.S. GAAP will fully converge
with only minor differences for some U.S. domestic quirks. I support
the IFRS phenomenon strongly. The biggest challenge: get U.S.
accounting education to embrace IFRS fully. That means a major
change in educational patterns—and I have been there before. Do we
need another Accounting Education Change Commission (AECC) to
address the IFRS challenge? That might not be such a bad idea.

Flesher:
Who would comprise such a commission?

Mueller:The
[commission] might be constituted along AECC lines: representatives
of major professional accounting organizations [for example, the
AICPA, the National Association of Accountants, Financial Executives
International, internal auditors and financial analysts], AACSB
[Association to Advance Collegiate Schools of Business], a few
highly visible accounting textbook writers, and a few AAA past
presidents. Funding, maybe $5 million, might be sought from
accounting foundations, the SEC and the NYSE. The AAA should have oversight.

Flesher:
You used the phrase “will fully converge.” Is this really
convergence, or is this simply the U.S. adopting IFRS, or
perhaps IFRS taking over in the U.S.?

Mueller: My
thought is that the “convergence” process is likely to remain a
three-way affair: FASB will adopt some IASB positions outright, same
thing in reverse, but for most standards there will be negotiation,
background research, exposure drafts and finally a measure of
compromise to arrive at full convergence. The fair value
measurements issue fits this pattern.

Flesher:
One of the problems facing the adoption of IFRS is the
difficulty of getting the topic into textbooks. How big a
problem is this, and what books are affected? Will it really
make a difference in principles textbooks? It seems that it
would mostly be intermediate and advanced accounting textbooks
that would be affected.

Mueller: You
are certainly right: The technical changes required are not all that
earthshaking. But language and context need to change. Such change
(that is, setting the tone) needs to start with principles, go right
through intermediate and advanced, and then extend to auditing and
tax courses.

But
change in higher education for accounting is like moving a
cemetery—well nigh impossible. That is why I suggested earlier that
another AECC might be called for. If we had well-financed IFRS
curricula at, say, two dozen schools, the feasibility of it all
would be demonstrated. One reason that the former AECC was only
moderately successful was what was then taught in doctoral programs.
New faculty had no notion of the whys and wherefores of fundamental change.

I
would abandon completely the teaching of separate international
accounting courses at this time and seek full integration of IFRS
throughout the curriculum.

Flesher:
How do you prepare instructors to teach this, and how can
instructors partner with publishers to create books that explain
the transition and differences?

Mueller:Accounting
instructor preparation would be just the same as it is at present
with a new FASB standard, a new tax law or new SEC regs. If an “IFRS
Commission” were to come about, it would show the way with examples
at a dozen or so “demonstration” schools. One approach (with which I
had nothing to do) was reported by professor Terry Shevlin, chair of
the Department of Accounting at the University of Washington,
Seattle, in the department’s fall newsletter:

We
are employing a “compare and contrast” approach across the
curriculum this coming academic year. The approach involves
continuing to present the economics of a transaction, how U.S. GAAP
accounts for the transaction and then comparing how IFRS accounts
for the transaction. We will be using this approach across all
financial accounting classes in the curriculum.

The
publisher question no doubt will be answered by individuals
contracting between the interested parties just as it is at present.
I perceive no change in this respect from a shift to an IFRS framework.

Dale
L. Flesher,
CPA, Ph.D.,is associate dean and Arthur Andersen
Alumni Lecturer at the Patterson School of Accountancy at the
University of Mississippi. His e-mail address is acdlf@olemiss.edu.

The results of the 2016 presidential election are likely to have a big impact on federal tax policy in the coming years. Eddie Adkins, CPA, a partner in the Washington National Tax Office at Grant Thornton, discusses what parts of the ACA might survive the repeal of most of the law.

Even as the IRS reported on success in reducing tax return identity theft in the 2016 season, the Service also warned tax professionals about yet another email phishing scam. See how much you know about recent news with this short quiz.